New 2nd-Screen Entrant Targets Demand for Monetization Tools

Tom Engdahl, CEO, Magic Ruby

Tom Engdahl, CEO, Magic Ruby

September 4, 2012 – Another player has entered the second-screen TV services arena, this one with a strategy that just might add some of the business coherence essential to igniting scalable engagement across all the stakeholder segments.
Magic Ruby, a Hollywood-based startup with additional offices in New York and San Francisco, provides some of the automatic content recognition and app components other second-screen suppliers have in play but adds functionalities and personal tie-ins with Madison Avenue which CEO Tom Engdahl hopes will secure its role as a market mover. “It’s a very confused marketplace right now,” Engdahl says. “We believe we have the talent, technology and partners to help unite the industry.”

Engdahl, an entrepreneur with several successful startups to his credit in the media and communications market, saw an opportunity to create the missing link that would enable direct revenue streams for advertisers, content creators, distributors and app developers in the second-screen space. “When we started thinking about second screen a couple of years ago we saw a lot of people focused on drawing viewers but without a lot of thought given to monetization,” he says. “Our question was, where are the dollars that can flow in to make these things happen?”

Not much has changed over that time, he asserts. “Even now, if you go to the ad agencies and ask what they’re doing with second screen, they say, ‘What’s second screen?’ We see some smaller agencies getting involved, but mainstream folks who have the money don’t understand it yet.”

Consequently, Magic Ruby’s job is “to create the infrastructure on the backend,” he says. “People have the ability to create and deliver second-screen apps, but they don’t have the connectivity into advertising that allows them to sync ads to content or to enable fulfillment for e-commerce.”

Getting into position to capitalize on the backend opportunity is a tall order, given the nascent, confused state of the second-screen environment, where multiple suppliers enabling synchronization of apps on laptops, tablets and smartphone with TV programs are vying for partnerships with networks, advertisers and service providers. To gain traction in the market, Magic Ruby saw that it had to create an end-to-end solution to drive programmer and advertiser engagements with the core backend infrastructure it hopes eventually to provide for everyone in the market.

“We’ve assembled a team of experts with diverse backgrounds in order to build out the whole infrastructure,” Engdahl says. “In the short term we’re creating apps as well as supplying the automatic content recognition capabilities we need to establish our presence. If in two years I’m out of the app business, I’m okay with that.”

As for the all-important backend framework, the company has developed an e-commerce fulfillment engine to support credit card billing and other functionalities on second-screen apps that are now in early rollout stages with unnamed broadcast networks and others. “That experience is working now,” Engdahl says. “The ad placement experience works for banner ads, and we support a limited amount of media buying tools. But this is just the beginning.”

The company plans to roll out a full product suite of automated media ad buying tools and other elements for the backend component of the infrastructure by sometime in February. “In the meantime, we can do it manually for our customers, but it’s not scalable,” he says.

Presently, online second-screen providers who rely on manual engagement rather than ACR-based synching to deliver a rudimentary version of second-screen experience are limited to providing fairly generic text-based information with banner ads as the only means of monetization. In the ACR domain, where video-rich apps can be precisely tuned to the program flow, the experience is much more engaging.

“Advertising is going to have to be changed beyond the banner ads we’re seeing today,” Engdahl observes. “The compelling opportunity comes with interactive advertising and the move to product placements and engagement with customers to do interesting things within the program content, not just during ads.”

The experience has to be more TV like and equipped with options that allow users to return to apps such as games which they may want to play after they’ve watched the program, he adds. “Our secret sauce is to get into the ad agencies and give them the tools to make this new ad experience possible,” he says.

“You need different, specialized tools to get that experience to match the spot and to deliver apps that are relevant to it. And you have to be able to manage the opportunity through the lifecycle of the program so that a year from now when it’s in syndication, you can deliver the right app.”

In a pre-rollout trial of a soon-to-be announced app with a major programming network Magic Ruby is already seeing the commercial potential of this strategy. “The synchronization of our app with the program has produced significant e-commerce purchase rates,” Engdahl says.

Magic Ruby got a good start in second-screen app development by gaining access to MediaEcho, the second-screen media platform developed by Technicolor. “The best example of MediaEcho in action commercially has been the King’s Speech movie app on Blu-ray discs,” Engdahl notes. “You can download the app from the Apple store and get information about the movie as you watch.”

The company also licensed Technicolor’s audio watermarking capability as one of four means of achieving tight synchronization between the online-supplied apps and a given TV program. “We’re also partnering with people who supply fingerprinting technology for instances where that approach to automatic content recognition is appropriate,” he says, although he stresses that watermarking, because of its support for near instantaneous connectivity to the apps, is Magic Ruby’s preferred mode in most cases.

There is also a tie-in with Technicolor where synchronization capabilities built into Technicolor’s Thomson set-tops support any second-screen apps supplied by Magic Ruby. And the company is leveraging the built-in synchronization capabilities of Blu-ray as well.

To help jumpstart the market Magic Ruby is putting a lot of energy into developing apps for specific programming environments. For example, one not yet available is labeled “Number One Fan,” which tracks people who register as fans for a show in conjunction with their interaction with friends on social networks.

“At the end of the week or whatever timeframe, if you qualify as a Number One Fan your picture goes up on the Facebook second-screen app for that show,” Engdahl says. “We know that can be more important to a viewer than any reward we might give them. And because of its potential popularity, programmers can sell ads around that app.”